Thursday, November 10, 2011

Marketing Metrics and Analytics: Defining, Using, and the Results

If you spend any time in the marketing field at all, you’ll hear these words bandied about: analytics and metrics. They’re used in reference to marketing of all forms from print, to audio/visual to interactive. I’ve discovered that a lot of people in the field don’t really know the difference or how to truly use them. Make no mistake, though, the two are very different and the use is more involved then pulling open a spreadsheet or metrics tool and parroting the numbers.

Metrics vs. Analytics

It’s pretty simple when you get right down to it. Metrics are numbers and that’s all. They may indicate market share, response rates, advertising dollars spent, page visits, or clickstream. They usually show up in columns or rows in a spreadsheet type of layout. Metrics are the lifeblood of all the measuring that we do.

Analytics is pretty easy to figure out: it’s the science of analysis. Who would’ve thought? And analysis is, of course, the process of deriving complex concepts or propositions from basic components. In other words analytics is the process of making a decision or proposition based on the existing data, or metrics. Now, decisions may incorporate information from other qualitative sources such as “rule-of-thumb” or past history, but as long as metrics are involved it remains a quantitative analysis.

How to Use Analytics

As with every complex undertaking, having a good plan in place is more likely to lead to a successful endeavor. Marketing analysis is no exception. There is a series of steps I typically go through when I’m setting up an analytics model.
  1. Identify the business objectives. Successful objectives are SMART: Specific, Measurable, Actionable, Realistic, and Time Specific. For example, a new business objective might be to achieve sales of $500,000 within 5 years.
  2. Identify the goals for each objective. Goals are strategies you leverage to achieve the objectives. Define the steps you’re going to take and how you will take each one. An example goal for the above objective might be a first year sales goal of $50,000, accompanied by strategies for accomplishing that goal.
  3. Identify the Key Performance Indicators and set parameters for them. KPIs should reflect the organizations goals, be key to their success, and be quantifiable. In our example, a KPI would be repeat customers and the parameter is that 12% of sales must come from those repeat customers.
  4. Identify the segments for analysis. Are you going to analyze phone calls? Page views? Trade show booth visits? Conversions? Determine which segments need to be analyzed in order to determine failure or success of the objectives and goals.

The Benefits of Analytics

Did you know that in some cases, using analytics, B2C companies have seen a YOY market share growth of 30%? Sales increases of up to 50%? And customer attrition rates decreased by as much as 40%? Those are some pretty awesome numbers and obviously one of the best ROIs out there.

Why is that? Mostly it’s because analytics can provide you with very specific information that will help you hone or modify your marketing strategy or mix in order to take advantage of the metrics being received.
  • The best referral sites for your advertising.
  • Which products are more popular and which promotions are most effective.
  • Track buyer habits to determine interests and target cross-selling opportunities.
  • Identify clickstreams and errors to optimize your web site's layout and functionality.
  • Send E-mail or direct mail blasts with targeted promotions.


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